08 January 2015 Asia Pacific/Taiwan Equity Research Semiconductor Devices Taiwan Semiconductor Manufacturing (2330.TW / 2330 TT) Rating (from Outperform) NEUTRAL Price (08 Jan 15, NT$) 138.00 DOWNGRADE RATING Target price (NT$) 145.00¹ Upside/downside (%) 5.1 Mkt cap (NT$ bn) 3.58 (US$ 111,910 mn) Competition heats up in 2015 Enterprise value (NT$ mn) 3,463,889 ■ Competitive landscape a key focus for 2015. We downgrade TSMC to Number of shares (mn) 25,929.87 Free float (%) 87.3 NEUTRAL from Outperform with TP unchanged at NT$145, toning down our 52-week price range 141.5–100.5 positive view of the past five years. We see increasing customer ADTO - 6M (US$ mn) 148.6 concentration risks where further share gains are limited and may slip, *Stock ratings are relative to the coverage universe in each analyst's or each team's respective sector. moderating growth from mobile; rising competitors finally lifting their yields; ¹Target price is for 12 months. and valuation back in line with Taiwan tech and its historical average due to Research Analysts slowing YoY/sequential momentum after the likely strong 4Q14 results report. Randy Abrams, CFA ■ Customers more concentrated but now able to diversify. Qualcomm, 886 2 2715 6366
[email protected] Apple and Mediatek have supplied half of TSMC's growth in the past four Nickie Yue years and to boost TSMC’s growth 700 bp to 16%. Further share is capped 886 2 2715 6364 or might even slip as Apple brings Samsung/GF back in for iPhone,
[email protected] Qualcomm relies more on Samsung/GF/UMC/SMIC, and further Mediatek gains are capped with TSMC's share up from 20% to 70% since 2007.